Volume 18, Issue 4-5 June 18, 2010 The UPDATE Report · ASA members have been asking questions...

Standard Commercial Documents: A Primer on the Spec 106 . . . . . . . . . . . . . . . . . . .1

Shipping Fuel System Components . . . . . . . . . . . . .8

ADS-B Avionics: Don’t Get Stuck Holdingthe Hot Potato . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Small Business Health Care Tax Credit . . . . . . . . . . . . . . . . . . . . . . .13

Experts Debate the Future of Aviation . . . . . . . . . . . . . . . . . . . . . . . . .16

AS 9100 Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

SMS In Our Future? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

CONGRATULATIONSTO THE FOLLOWING

COMPANIES ON THEIRACCREDITATION:

Format Aerospace, Inc.

Wichita, KS

Memphis Aircraft Parts

Memphis, TN

• AND •

Advantage Aero, Inc.

Middleton, WI

Aerosphere Aviation

Services, Inc.

Greensboro, NC

AirGroup America, Inc.

Mars, PA

American Jet Industries

Canoga Park, CA

First Wave, Inc.

Tulsa, OK

Flight Product Center, Inc.

Chantilly, VA

Flight Support

International, Inc.

Glenview, IL

Global Solutions Group

Laguna Hills, CA

Continued page 3...

StandardCommercialDocuments: A Primer on the Spec 106

ASA members have been asking questions about the ATA Spec 106 form,which is one of the most commonly used commercial documents foraircraft parts. We felt it was time to provide a general discussion aboutwhat the Spec 106 Form is, and what it isn’t. Some of the questions we’vegotten recently have been basic ones, like how to interpret certaininformation in a Spec 106; but some of the questions have illustrated howquickly the industry can change, and how important it is for the industryto make sure that new personnel are well-trained.

This article provides answers to some of the most commonly askedquestions about the Part and Material Certification Form fromSpecification 106, as well as a basic primer on what the Spec 106 is.

What is Spec 106?The Air Transport Association publishes the Specification 106: Sourcesand Approved Parts Qualification Guidelines. This document is commonlyknown by its short-hand name Spec 106. Spec 106 provides air carriers andothers in the industry with recommendations and guidance concerningquality programs, particularly in the parts receiving and procurement areas.

Except to the extent that certain provisions of Spec 106 may be drawn fromthe regulations, Spec 106 is not a mandatory document. ATA encourages its air

carrier members to make their own decision about which aspects of Spec 106should be used in each air carrier’s own operations. Air carriers and other parties

Volume 18, Issue 4-5 • June 18, 2010

The UPDATE Report

(Continued on Page 3)

June 18, 2010 ASA - The Update Report 1

INSIDE:

Luis Giacoman . . . . . . . +503 2312-4008Aeromantenimiento S.A. (Aeroman)

Robert (Bob) Hogan . . . . . (972) 245-9633Pratt & Whitney Commercial Serviceable Assets

Richard Levin . . . . . . . . . . . (818) 842-6464A.J. Levin Company

Greg McGowan . . . . . . . . . . . . (206) 898-8243 Boeing Comercial Airplanes

Graham Mitchell . . . . . . . . +44 (0) 208-447-3398Aero Inventory (UK) Limited

Brent Webb . . . . . . . . . . . . . . . . . . . (972) 488-0580 Aircraft Inventory Management & Services Ltd.

Mitch Weinberg . . . . . . . . . . . . . . . . . . . (954) 441-2234International Aircraft Associates, Inc.

Jimmy Wu . . . . . . . . . . . . . . . . . . . . . . . . . . (818) 881-8911 Infinity Air, Inc.

Dear Colleagues,

There are many people who contribute to the success of ASA. One such person is RoyResto. That is why with no joy the ASA Board of Directors accepted his resignation as

an ASA Director. As Roy explained to the Board, his job is focused on repair issues,and with limited interaction in distribution, he felt it was time to leave the Board.Roy’s involvement with ASA dates back to his days at American Airlines. He leftAmerican and joined a consulting company, QMS LP, which listed ASA among itsmany clients. While at QMS LP, Roy managed the ASA-100 auditors.

Roy joined Tracer Corporation and was elected to the ASA Board of Directorsin April 2001. Roy’s business acumen, along with his knowledge of quality,regulatory, and operational issues, added value to the Board and contributedto ASA across all areas. Roy has promised to continue to participate in ASAand is speaking at this year’s annual conference.

One of Roy’s last duties as a Director was to work with the ASA Board toappoint his replacement. The Board has appointed Luis Giacoman to theremainder of Roy’s term. Luis is currently serving a second appointed termon the Board of Directors. In an effort to strengthen the Board, the Directorshave appointed Jimmy Wu (President of Infinity Air and Allflight) to a two-year term on the Board. Jimmy’s experience as an owner of an ASA-100accredited distributor and a repair station; experience in international salesand marketing; passion for safety and his energy level will not onlystrengthen the Board but continue to ensure that the Board represents thedemographics of the membership.

Both Jimmy and Roy will be at the annual conference.

Take care, Michele

THE UPDATE REPORTis the newsletter ofthe Aviation Suppliers

Association.

OUR COMMITMENTASA is committed to providingtimely information to helpmembers and other aviationprofessionals stay abreast ofthe changes within the aviation

supplier industry.

The UPDATE Report is just one ofthe many benefits that ASA offersmembers. To learn more aboutour valuable educational programs,please contact ASA.

THE UPDATE REPORT STAFFPublisher . . . . Michele Dickstein Editor . . . . . . . Jason DicksteinProduction . . . . Squaw Design

QUESTIONS ?EMAIL questions to:[email protected]

MAIL questions to: Jason DicksteinAviation Suppliers Association2233 Wisconsin Ave., NW Suite 503 Washington, DC 20007Voice: (202) 347-6899 Fax: (202) 347-6894

MESSAGE FROM ASA’S PRESIDENT

BOARD OF DIRECTORS

OFFICERS:Mitch Weinberg

(954) 441-2234Corporate TreasurerJason Dickstein

(202) 347-6899Corporate SecretaryMichele Dickstein

(202) 347-6899President

LIST OF ADVERTISERS

AMUSA Expo . . . . . . . . . . . . .12

ASA Conference 2010 . . . . . . 4

ATE&M Magazine . . . . . . . . . 11

ILS Supply Chain Solutions . 15

Schaefer Consulting Svcs . . . 6

Silver Eagle Agency . . . . . . . . 9

Hazmat Training . . . . . . . . . . 13

Quantum Control . . . . . . . . . . 7

Want to expand yourmarketing opportunities?

Advertise in

The UPDATE Report!For more information, e-mail:

[email protected] call (202) 347-6899.


mailto:[email protected]








Not Accredited Yet?

To Learn more, contact us at:

Phone (202) 347-6899

Email [email protected]

Webwww.aviationsuppliers.org

may freely adopt all, part, or none of the program for their own use.While the specification was once a very popular tool, it appears to havefallen into disuse to a certain extent, especially as other standards havebecome more prevalently used as the basis for quality assurance systems.

The Spec 106 FormOne element of Spec 106 has remained very popular in the industry,though. Spec 106 provides a sample form for part or materialcommercial certification. Use of this form has continued to be common- in fact the Spec 106 form is often used as a “cover page” even whenother certification or traceability documentation is available for a part.

Like the rest of the ATA specification, the form is meant to serve as atool that is available to the industry, and its use is entirely up to theindividual companies. For this reason, it is not uncommon to see manydifferent versions of this form. Every company is freely permitted tochange the language to suit the company’s needs.

It is important to note that the Spec 106 Form is a commercialdocument. It is not directly subject to regulation by the FAA, but falseor misleading statements on a Spec 106 Form (or on any othercommercial form describing an aircraft part) can lead to civil actions(like fraud or breach of contract), enforcement action under FAA Part 3or even criminal action under the US false statement rules (whichinclude special laws that apply to aircraft parts).

Spec 106 and UniformityIn the past, it was common for each air carrier to have its own versionof the Spec 106 form, and each air carrier would ask its distributors tocomplete their version of the form. This practice is not as commontoday - it was considered to be quite burdensome for distributors tohave to sign different forms for different customers. The lack ofuniformity also made it difficult to complete the form in a uniformmanner. While there are directions for the completion of the formincluded in the specification, these directions only apply to the formwhen it has not been altered, and the more that the form diverges fromthe original version, the less useful those instructions become.

The modern trend has been for air carriers to encourage greateruniformity in the Spec 106 form. There are human factors advantagesto the use of uniform documentation for identifying parts. Personnel canbe trained to look in the right place on the form for the information thatis necessary. They are less likely to make mistakes in reading the formif the form is uniform.

Obviously, an array of minor variations in the forms will increase thelikelihood of misreading or misinterpreting the form. Receiving


Grahmann International

Contracting

San Antonio, TX

JM International

Vista, CA

MidAmerican Aerospace, Ltd.

Cedar Rapids, IA

NORDAM Spares

Tulsa, OK

Professional Aviation Associates

Atlanta, GA

Universal Asset Management

Memphis, TN

Upsilon International Corporation

Torrance, CA

FOR THEIR REACCREDITATIONTO THE ASA-100 STANDARD AND THE

FAA’S AC 00-56A VOLUNTARY INDUSTRYDISTRIBUTOR ACCREDITATION PROGRAM


REGULATORY UPDATE(Continued from Page 1)

REGULATORY UPDATE


(Continued from Page 3)

(Continued on Page 5)0102

ANNUAL CONFERENCE • JUNE 27-29, 2010 • Four Seasons Las Vegas

INFORMATION FOR SUCCESS

REGISTRATION NOW OPEN!Visit www.aviationsuppliers.org/

Annual-Conferencefor details.

ASA 2010 KEYNOTE SPEAKER —Dale Wilkinson, Vice President of Material Management, Boeing Commercial Aviation Services

Additional Speakers At-A-Glance Carol Giles, Manager, Aircraft Maintenance Division, FAADr. Richard Levin, Executive Coach, Television Commentator, and Newspaper ColumnistDavid A. Marcontell, President, TeamSAI M&E Solutions

Check the ASA 2010 Website for the most up-to-date list of 2010 Speakers!

inspectors must look very carefully at the form to ascertain its actual language and interpret that language.Because the form can vary, no receiving inspector can rely on the form to attest to any uniform informationuntil the complete form has been read and studied. This eliminates some human factors advantages to formharmonization, although the basic format and layout of the form tends to remain the same in most cases, sothere is an ability to provide some training on what to look for in the form.

Despite the human factors advantages to uniformity, the fact remains that there are often significantdifferences in the language used on the Spec 106 forms issued by companies.

What Does the Spec 106 Form Tell Us About a Part? Because the language of the Spec 106 form can vary, it is important to read the language carefully for thosevariances. The “plain-vanilla” version of the Spec 106 form reflects an assertion about the qualities of anaircraft part. It is common in the industry to rely on these documents, so there is a strong likelihood that theSpec 106 assertions will be treated as quasi-contractual (or contractual) in nature, and will therefore beenforceable as such.

The Spec 106 form usually identifies a part by manufacturer, part number and description (and serial, batchor lot number where appropriate). It generally identifies a “status“ of the part. It also may indicate where thepart was obtained from (seller’s source of purchase) and/or the last certificated agency to perform work onthe part (for repaired, modified or overhauled parts). This sort of information is all important to the identity ofthe part as well as to the airworthiness determination that is important to the installer. Thus, accuracy whencompleting the Spec 106 is very important.


http://www.aviationsuppliers.org/Annual-Conference

StatusThe Spec 106 usually includes a space to describe the status of an aircraft part. According to thespecification, ‘status’ can be any of the following eight terms:

• new• new surplus (unused)• rebuilt• overhauled• inspected• modified• repaired• as is

Other terms may be used to describe status, but they are not part of the recommendations of theSpecification. One very common ‘variant’ term that is used is “serviceable.” The FAA has specificallyrecommended against the use of this term on FAA Form 8130-3 because it is undefined. Generally,serviceable means that the aircraft part is acceptable, but the scope of that acceptability can vary (to whomis it acceptable? under what circumstances is it acceptable? etc.). Thus, best practice continues to stronglyrecommend that those completing the Spec 106 Form use one of the eight terms from the Specification todescribe the status of the aircraft part.

Block 13The form described in Spec 106 features standard information blocks. Some particularly importantinformation can often be found in the remarks area of the form. The remarks area is split into three sections:Block 13A (remarks), Block 13B (obtained from) and block 13C (last certificated agency).

Directions for the use of the Spec 106 form are found in Appendix C to the specification. The directions makeit clear that block 13B is meant to represent “seller’s source of purchase.” If the seller is an FAA certificateholder, then the directions for this block state that completing it is optional.

Block 13C is meant to be used for parts that have been subject to some form of maintenance work.

According to Spec 106, Block 13C is meant to identify the last certificated agency that performed maintenanceon the component. In some cases this may be the last operator. For example, if the last air carrier to use thepart performed an inspection on it (such as the inspection described in FAA Order 8130.21B), and found it tobe airworthy, then the carrier would be the last certificated agency to perform maintenance. Remember:inspection is a maintenance activity!

Block 13C is not meant to represent the last certificated agency to own the part. An overhauled part could bepurchased by an air carrier, remain for six months in the inventory of that air carrier, and then be sold withoutthe air carrier ever performing maintenance on that part. In such a case, the last certificated agency wouldnot be the air carrier, but would instead be whatever company last performed a maintenance activity on the part.

Common Alterations: “Traceable To”The SPEC 106 form is a commercial form recommended by ATA. As such, it is not binding and air carriersand other parties frequently develop their own versions of the form that diverge from the ATArecommendation. For this reason, it is not uncommon to see alternative language in Block 13B or in Block 13C.

REGULATORY UPDATE




REGULATORY UPDATE




One popular modification to the ATA 106 form is the replacement of the Block 13B descriptive text with aphrase like “traceable to.”

“Traceable to” is not the ATA recommended language for the form, so the Spec 106 instructions do not provideclear guidance about what this language means. Many people interpret this sort of language to mean the lastcertificate holder that owned the part, but some interpret it to mean traceability to the FAA-approvedmanufacturer who produced the part.

The ATA 106 is a tool to facilitate commerce. As such, you should use it to reflect the information that you andyour customer need to exchange. Anyone who completes a Spec 106 form should make sure that theinformation conveyed accurately reflects the truth, and also effectively communicates the information that isimportant to both parties.

Look carefully at the language of a Spec 106 form provided by a business partner, because it may not usethe common language, and when it does not, it is important to understand what the alternative language means.

Where the parties intend to use any Spec 106 block to reflect information other than that described in theinstructions, then it should be clear on the face of the form what information is actually provided. Bear in mind,though, that the ATA rules for completion of the form would likely apply in any dispute resolution, unless theform had been materially altered so as to make the ATA 106 rules meaningless, or you had a writtenagreement concerning the alternative method for completing or interpreting the form. If the text on the formis not clear, then an explanatory paragraph attached to the form may be in order, to avoid later confusion.

Value of the ATA 106 FormThe ATA Form 106 is an uncontrolled document that may be the subject of ad hoc revision by individual users.Different versions of the form can mean different things based on revisions to the text on the form. It is notsupported by the FAA regulations. It can be signed by companies that do not hold an FAA certificate. In lightof these facts, some people ask whether the ATA 106 form continues to have value in the modern age. Theshort answer is, “Yes.”

It is common to forget thatdocuments do not have to beconsidered “regulatory” in natureto be valuable. Commercialdocuments reflect informationthat is important to commercialtransactions, and often thisinformation can be important tothe analysis performed by amechanic at the time ofinstallation. A properly completedSpec 106 form provides a varietyof information, such as commercialtraceability that helps the enduser know who to contact in theevent of problems with the part.

REGULATORY UPDATE


(Continued from page 6)

The Spec 106 may also provide commercially enforceable rights, in the sense that it asserts certain importantfacts about a part. To the extent that a customer relies on the representations found in the Spec 106 formsthat you issue, that customer may have enforceable rights if that information is not accurate. Accidentallyinaccurate information may give rise to contract rights; purposefully inaccurate information may reflect fraud,which can have both civil and criminal consequences.

Use the ATA 106 Form wisely to reflect the information that you and your customer need to exchange.

Note: an earlier version of this article was originally published in the January 2000 issue of the UpdateReport. This version has been updated and expanded.

Shipping Fuel System Components

Fuel system components that have fuel residue in them are considered to be hazardous materials and theway in which they are shipped is regulated. This can pose a problem for companies that have not yet trainedtheir shipping personnel.

Fuel system components with fuel residue are often shipped under the proper shipping name “dangerousgoods in apparatus.” When shipping fuel system components by air, they should first be emptied of fuel tothe extent practicable. All openings must be sealed securely (e.g. capped).

Once the component has been prepared for shipping, it must be packed in sufficient absorbent material toabsorb the maximum amount of liquid which may possibly remain after substantial (practicable) emptying. Ifit will be placed in an outer packaging that is not water-tight (like a fiberboard box), then the shipper shoulduse some means of containing the residual liquid in the event of leakage from the sealed component. Thenormal way to accomplish this is by using a leak-proof liner, plastic bag, or other equally effective means ofcontainment. The part should be secured or cushioned with packing material sufficiently to prevent breakage.Finally, it must be placed in a strong outer packaging like a fiberboard box or a wooden box. This outerpackaging does not need to meet UN performance specifications, however it should be strong enough towithstand the normal rigors of transportation.

The outside of the package should be labeled with a class nine (miscellaneous dangerous goods) label.Orientation arrow labels are permitted and generally should be added if it is possible for the fuel residue toescape in the event of incorrect orientation. The package must also be marked with the proper shipping name(“dangerous goods in apparatus”), the UN number (“UN 3363”), the name and address of the shipper (you)and the name and address of the consignee (the destination). Marking the net quantity of fuel residue ispermitted but not required (note that the net quantity of fuel residue is required to be estimated on theshipper’s declaration for dangerous goods, in addition to a disclosure of the gross weight of the article).

Personnel who make any decisions affecting the safe transportation of hazardous materials are required tobe trained - it is important to note that this article does not take the place of training. It is merely offered as aguide to some of the features of the regulations. Training must be repeated on a recurrent basis: three yearsfor most distributors. Air carriers in the US, and those performing Transport Related Functions (TRFs) for aircarriers, must be trained every two years. Outside the United States, many countries have adopted two-yearrecurrent training schedules.


REGULATORY UPDATE


(Continued from page 8)

ASA hosted two very successful hazmat training classes in Florida and California in May. These classes are twodays long and they lead to certification in accordance with US and international standards. We will be offering

hazmat training in Chicago in July and in Washington, DC in August. If you still need hazmat training, please

feel free to call us or to check out the training information online at http://www.dangerousgoodstraining.net.

ADS-B Avionics: Don’t Get Stuck Holding the Hot Potato

Avionics distributors will need to pay careful attention to the new equipage rules that were just released bythe FAA!

An integral part of the Next Generation Air Transportation System is the FAA’s plan to transform air trafficcontrol from the current radar-based system to a satellite-based system. The goal of satellite-based air trafficcontrol is to provide greater control and monitoring of air traffic. In order to implement this satellite-basedsystem, aircraft will require new Automatic Dependent Surveillance-Broadcast (ADS-B) avionic systems.

On May 28, the FAA announced a final rule which laid out performance requirements for these new ADS-Bavionics. The final rule makes ADS-B equipment required equipment in most aircraft (exceptions exist foraircraft not originally certificated with an electrical system, balloons, and gliders). The equipmentrequirements go into effect on January 1, 2020. While the requirement date is almost ten years away,avionics distributors need to begin examining their inventories on hand in the near future to avoid potentiallosses in the long-term from holding obsolete non-compliant equipment.

The equipment that will be necessary for air carriers is described in Technical Standard Order (TSO) TSO-C166b (published December 2, 2009). This is the equipment that will be necessary for flight in class Aairspace (between 18,000 feet and 60,000 feet). The equipment affected by this TSO is equipment intendedto transmit and receive broadcast messages about an aircraft’s position (latitude and longitude), velocity,integrity, and other parameters. This equipment includes transmitting and receiving equipment that meets thefollowing standards:

• 1090 MHz Automatic Dependent Surveillance - Broadcast (ADS-B) equipment• 1090 MHz Traffic Information Service - Broadcast (TIS-B) equipment

An entire ADS-B system consists of a “datalink” connected to a high-integrity global navigation satellitesystem (GNSS) receiver (i.e. GPS receiver). The high-integrity GNSS function generally must be filled by acertified Satellite-Based Augmentation System receiver (like a WAAS receiver).

Distributors carrying ADS-B and TIS-B equipment that operates on 978 MHz and not on 1090 MHz shouldnote that this will not meet air carrier requirements as of 2020, although it may be salable to the generalaviation market (see below). Also, 1090 MHz equipment meeting earlier versions of the TSO (e.g. TSO-C166a) may no longer be suitable after January 1, 2020. VHF datalink (VDL Mode 4) equipment, which wasidentified as an ICAO standard in 2001, may not meet the new regulatory requirements.

The final requirements don’t go into effect until January 1, 2020; however, many air carriers may begin tophase in compliant equipment much sooner than that. On May 21, the FAA issued Advisory Circular (AC) No.


ATE&M

Full Page Ad

REGULATORY UPDATE



20-165, entitled “Airworthiness Approval of Automatic Dependent Surveillance-Broadcast (ADS-B) OutSystems.” While AC 20-165 is not mandatory, it provides installation and maintenance guidance for ADS-Bsystems, and many actors in the aviation field will look to the AC for guidance.

Importantly, the ADS-B system is not a stand-alone system, rather, it interfaces with many other externalcomponents, such as altimetry sources and position sources, as well as the antennae. AC 20-165 states thatany maintenance or design changes to these external components must “be accomplished in such a way thatcontinued satisfactory performance of the overall ADS-B system is maintained.” So, any future maintenanceor design changes to interfaces associated with the ADS-B system must maintain overall performance of theADS-B system and include procedures to ensure that the interface continues to function properly.

While some carriers may wait until the 2020 deadline to incorporate the new ADS-B equipment, it seems likely thatsome air carriers will begin to incorporate the new ADS-B equipment much earlier, as part of routine upgrades.

And it is not just the commercial aviation industry that needs to be concerned. Many aircraft in the generalaviation industry already feature ADS-B compliant equipment but those aircraft owners that are not yetcompliant will need to consider compliance in their long-term strategies. This is because ADS-B equipmentwill be needed for flight through most controlled airspace in the United States.

For general aviation aircraft that will not be flown in class A airspace, and indeed for most flight in controlledairspace below 18,000 feet (e.g. class B & C airspace, and other locations specified in the regulations),aircraft will need to be equipped with equipment that meets either the new TSO-C166b ADS-B requirementsor the TSO-C154c ADS-B requirements. Therefore, unpressurized aircraft and other aircraft flown below18,000 feet may be equipped to the TSO-C154c requirements (instead of TSO-C166b). TSO-C154c waspublished December 2, 2009 and covers ADS-B and TIS-B equipment operating at 978 MHz.

This has important implications for avionics distributors. Avionics that do not meet the new ADS-B/TIS-Brequirements are still likely to remain in demand in the short-term; however, demand for equipment that doesnot meet the latest standards is likely to fall off dramatically as the 2020 deadline draws near and earlierequipment becomes obsolete. Thus, it is important for distributors to take careful stock of their currentinventory to determine their holdings of equipment that may not meet the newest standards. Distributorsshould attempt to move this equipment in the near-term, and as demand for such equipment decreases,distributors should be careful about taking on inventories of avionics equipment that will not meet the latest

standards to avoid being stuck with the hot potato of obsolete equipment.

REGULATORY UPDATE


Small Business Health Care Tax Credit

The Patient Protection and Affordable Care Act, enacted March 23, 2010, includes a tax credit for qualifyingsmall businesses that provide health care coverage to their employees. This tax credit is effective for taxableyears beginning in 2010. This credit is one of the first health care reform provisions to go into effect and isdesigned to encourage small businesses to offer health care coverage to their employees for the first time orto continue the coverage they already provide.

To qualify for the program, an employer must meet three requirements. The employer must, (1) employ less than25 full-time equivalent employees (FTEs), (2) pay an average salary of less than $50,000, and (3) pay at least50% of insurance premiums for employees. Each of these requirements is discussed on the following page.

Who should attend ?This course is intended for all individuals who may come into contact with, or make decisions that

affect hazardous material (Hazmat) or dangerous goods (DG).

Why should I attend ?The U.S. Department of Transportation (U.S. DOT) requires that all individuals engaged in handlinghazardous materials must be trained at least once every 3 years. Air Carriers are required to betrained annually, and IATA requires training every 2 years.

This course will focus on shipments of Dangerous Goods under the IATA Dangerous GoodsRegulations (a field manual that includes the ICAO technical instructions). This course will alsoaddress matters arising out of United States’ regulations that are not covered by IATA.

All attendees receive a Certificate of Training stating 49 CFR 172 Subpart H training requirementshave been met (upon successful completion of all attendance and testing requirements).

July 14 & 15 • Chicago, IL

Aug 2 & 3 • Washington, DC

To register: Or call:

www.washingtonaviation.com/hazmat 202-628-6777

REMINDER: ASA MEMBERS GET DISCOUNTED REGISTRATION.

2010 Hazmat Training

(Continued on )


REGULATORY UPDATE

1. Determining Total Number of EmployeesAn employer’s number of FTEs is determined by dividing (1) the total number of hours for which the employerpaid wages to employees during the year (but with a maximum of 2,080 hours for any one employee) by (2)2,080. This number, if not a whole number, is rounded down to the next lowest whole number. If this numberis lower than 25, than the employer should move on to step 2, determining the average salary per employee.

Employers should realize a couple of important aspects regarding calculating the number of FTEs. Generally,hours worked by seasonal workers do not count if the workers worked for less than 120 days during the year.Owners (sole proprietors, partners, shareholders of more than 2% of an S corporation) also do not count asemployees. Also, any family members of an owner do not count as employees. Thus, hours worked by allsuch individuals would not count in determining the number of FTEs.

2. Determining Average SalaryTo determine the average salary for employees, simply divide (1) the total annual wages paid to employeesby (2) the number of FTEs calculated in step 1. If this number is lower than $50,000, move on to step 3.

As with determining the number of employees, wages paid to seasonal workers, owners, and family membersof owners are not counted in determining average salary.

3. Pay 50% of Insurance PremiumsFinally, an employer must pay at least 50% of insurance premiums for employees. Importantly, if an employeroffers employees multiple health care plans (ex. a major medical plan and a dental plan), to receive the taxcredit on the premiums paid for each plan the employer must meet requirements 1 through 3 for each planindependently.

If an employer meets all three requirements, then they are a qualifying employer for purposes of receivingthis tax credit.

How much can a Qualifying Employer Claim for the Tax Credit?The Small Business Health Care Tax Credit is designed to provide the maximum benefits to smalleremployers - employing less than 10 FTEs – that pay average salaries under $25,000. These employers withless than 10 FTEs paying under $25,000 can claim 35% of their premium costs in 2010.

Employers that have 10 or more FTEs, or that pay average salaries in excess of $25,000, still qualify for thetax credit, but the amount they can claim is reduced. The amount such employers can claim is reduced basedon the number of employees over 10 that they hire and the amount of average wages over $25,000 that theypay. The credit is reduced to zero for businesses with 25 employees or for businesses with annual averagewages equal to or greater than $50,000. Full details on this system can be found in the IRS Notice that islisted below.

Employers can claim only that premium cost which the employer actually pays in. For example, if theemployer pays in 80% of premium costs, and the employee pays in 20%, then the employer can claim a taxcredit of 35% only of that 80% portion that they actually paid in. For those whose health care programs are“above average,” the amount of the credit is limited only to the average health care premium in your state(these average amounts were published in an IRS Bulletin on May 24). Additional limits on maximum claimsexist that are more fully addressed in the IRS’ Notice (there is a link to the Notice at the end of this article).




REGULATORY UPDATE

How do I Claim this Tax Credit?

The tax credit can be claimed on your annual income tax return. Note that this tax credit can only offset actualincome tax liability, but it can be carried forward. Also, claiming such a tax credit does affect an employer’sdeduction for health insurance premiums – the amount of premiums that can be deducted is reduced by theamount of this credit.

This is just an overview of the Small Business Health Care Tax Credit. Before claiming such a tax credit,please consult your tax advisor. More information can be found at the following links.

• Do you qualify? 3 Simple Steps: http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf• Small Business Health Care Tax Credit FAQs:

http://www.irs.gov/newsroom/article/0,,id=220839,00.html• IRS Notice providing guidelines and examples for claiming the Small Business Health Care Tax Credit:

http://www.irs.gov/pub/irs-drop/n-10-44.pdf

Experts Debate the Future of Aviation

The initial meeting of the Future of Aviation Advisory Committee took place on May 25, 2010 at the Departmentof Transportation building in Washington, DC. This is a new Committee that is charged with examining someof the issues facing aviation and developing recommendations for responses to those issues.

Transportation Secretary Ray LaHood welcomed the committee and explained that the idea for the FAACcame from a meeting with union representatives (Pat Friend of the Flight Attendants’ Union) in Florida, whoasked him to do something to find solutions to some of the issues facing the aviation industry.

Secretary LaHood explained that the Committee has been charged with addressing five broad issue areasfacing the industry:

• Ensuring aviation safety• Ensuring a world class work force• Balancing competitiveness and viability• Financing• Environment

The Secretary said that he intends for the Committee to:

1. Recommend actions that the government can take now that will make a real difference;2. Consider Federal rulemaking, legislation, and compliance measures as options;3. Use the diversity of the committee to achieve real results.

Despite the industry diversity that the Secretary stressed, we noticed that none of the participants representeither small business interests or the aviation aftermarket. Secretary LaHood explained that the ultimate goalis to improve the aviation system and the way that the public interacts with it.

FAA Administrator Randy Babbitt was also on hand to welcome the participants at this kick-off meeting. Hestressed the importance of focusing on safety as we seek improvements in the industry.




http://www.irs.gov/newsroom/article/0,,id=220839,00.html

REGULATORY UPDATE

The Committee is made up of the following participants:

• Committee Chair: Susan L. Kurland – Asst Secretary for Aviation and International Affairs, DOT;• Designated Federal Officer: Pamela Hamilton – Director of Rulemaking, Federal Aviation Administration;• Juan J. Alonso – Associate Professor in the Department of Aeronautics & Astronautics, Stanford University;• Susan M. Baer – Port Authority of New York and New Jersey;• David Barger – President and CEO, JetBlue Airways Corporation;• Bryan K. Bedford – Chairman, President & CEO, Republic Airways;• Severin Borenstein – Professor of Business Administration and Public Policy at the Haas School of Business;• Thella F. Bowens – President & CEO, San Diego County Regional Airport Authority;• John M. Conley – Intl Admin VP, Transport Workers Union of America;• Cynthia M. Egnotovich – Segment President, Nacelles and Interior Systems, Goodrich Corporation;• Patricia A. Friend – International President, Association of Flight Attendants;• Robert L. Lekites – President, UPS Airlines;• Ana McAhron-Schulz – Dir. of Economic and Financial Analysis, Air Line Pilots Association (ALPA);• William J. McGee – Consultant to the Consumers Union;• Daniel McKenzie – CFA, Hudson Securities;• Jack J. Pelton – Chairman, President, and CEO, Cessna Aircraft Company;• Nicole W. Piasecki – Vice President of Business Development, Boeing Commercial Airplanes;• Raul Regalado – President & CEO, Metropolitan Nashville Airport Authority;• Glenn F. Tilton – Chairman, President & CEO, UAL Corporation;• Christopher J. Williams – Chairman, CEO and founder of The Williams Capital Group, L.P.

A common theme among the participants was the importance of a systems-based approach to safety (SMS)as well as the importance of human factors and creating an environment in which employees are comfortableparticipating in safety.

The safety discussions stressed the importance of pursuing Safety Management Systems (SMS). NicolePiasecki, the Boeing representative, stated that a commitment to data-driven and risk-based analysis (keyelements of SMS) has also helped to foster an open safety culture. She explained that this is one of the pillarsupon which our future efforts must be based. Professor Juan Alonso also said that the industry needs to beprognostic rather than diagnostic. JetBlue President David Barger expressed that “you don’t know what youdon’t know, so collecting data and using it to drive our efforts is very important.“

The Chair asked how the FAA can incentivize the voluntary adoption of risk-based data-driven programs.David Barger felt that there was no need to incentivize safety because safety is its own incentive. Theeconomics of safety were a topic of discussion. Glenn Tilton of United explained that this is a complexindustry, but that it is easier to be safety-conscious when the businesses are profitable. Severin Borensteinis a former staff economist from the CAB. He explained that with economic deregulation we have seen bothrobust competition and volatility. Understanding that we will continue to see this volatility, he feels that weneed to expect bankruptcies, and we need to make sure we have protocols for ensuring safety even whenan air carrier is in bankruptcy.

David Barger repeated that he sees no need to incentivize safety best practices. His organization’s door isopen to any other organization and there is no need to impose mandates to share data. Susan Baer remindedthe group that it is important to share data with the FAA as well.

John Conley of the Transport Workers Union injected a note of reality when he reminded the group that while

everyone says that they are committed to safety, sometimes safety is elusive.



REGULATORY UPDATE

AS 9100 Update

The International Aviation Quality Group (IAQG) publishes the AS 9100 standard. AS 9100 is a derivative ofthe ISO 9000 quality and management standard - it differs from ISO 9000 in that it includes special provisionsthat are designed to reflect the special safety and quality needs of the aviation industry.

AS 9100 was mostly drafted for manufacturers, although non-manufacturers have implemented AS 9100-compliant systems as well by simply indicating that the manufacturing-specific elements are N/A.

In order to broaden the scope of businesses for whom AS 9100 can be useful, IAQG has developedalternative standards that are specific to other sectors of the industry. They include AS 9110, which is forrepair stations and AS 9120, which is for distributors. Those two derivative standards have had some troublecatching on in certain quarters. IAQG has been working on revisions designed to make all of these standardsmore useful to the industry.

So what are the changes to these three standards?

AS 9100 has been updated to better address the special needs of the space and defense industries. Itincludes requirements for variability reduction. It also incorporated ISO 9001:2008 changes. The draftershave added a significant number of interpretive notes and examples in order to provide better complianceguidance for those who are seeking to implement an AS 9100 system. There are also new requirements forproject management.

The AS 9110 standard is designed for aviation maintenance organizations. One focus of the standard is onsafety and management responsibility; and this is a major difference from AS 9100.

Under the safety side of AS 9100, compliant repair stations are expected to have a documented safety policyand documented safety objectives. The system should demonstrate the management commitment to a safetypolicy. In an AS 9110-compliant business, top management is responsible for ensuring that the policy andimplementation help lead the business to its safety objectives. Data collection in such a system shouldsupport the assessment of opportunities for improving the safety policy and safety objectives. AS 9110’smanagement requirements include a requirement for top management to appoint an accountable managerwith corporate authority, and also to designate managers responsible for assuring that all maintenancerequired is accomplished within the quality management system.

The AS 9120 standard is designed for aviation distributors. IAQG expects that AS 9120 should replace theSAE 7003 standard for distributors. The revised AS 9120 is expected to be based on a combination of ISO9001:2008 plus the elements of AC 00-56. The new version is expected to eliminate four elements that IAQGfelt were not necessary to distribution, specifically:• Project management• Risk management• Design and development• Validation of processes for production and service provision

In addition, the new version of AS 9120 adds some new clauses in the following areas:• Planning of product realization• Configuration management• Work transfers



CALENDAR OF EVENTS

Industry Events June 27-29, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ASA 2010 Annual Conference

Las Vegas, NV

Workshops

July 14-15, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HAZMAT WORKSHOPChicago, IL

August 2-3, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HAZMAT WORKSHOPWashington, DC

REGULATORY UPDATE

In addition to the changes to these standards, IAQG has also been working on new paradigms for auditing.The 9101 standard for QMS assessment is an auditing standard. The basic methodology associated withaudits is changing. Instead of looking at checklists, which can be incomplete, the audit methodology is beingrevised so that the auditor looks at the entire system and the functionality of the system to make sure thesystem is meeting objectives of the company.

9101 has new tools that will provide guidance on how to score the functioning of the system. The newapproach has more emphasis on performance measuring, and it introduces an objective evidence record(OER) for recording findings.

Major revisions to the standards take about three years to accomplish. Implementation of the new standardsis expected to take place between now and 2012.

IAQG has also announced that they intend to cancel two standards that support the AS 9100 family of standards:• 9111 QMS Assessment of manufacturers

• 9121 QMS Assessment of distributors

SMS In Our Future?

In a recent meeting, an aviation industry representative asked FAA Production and Certification ManagerFrank Paskiewicz when he sees a regulation coming to implement Safety Management Systems. There area lot of hurdles to overcome in order to implement SMS as a rule. Paskiewicz said that 2012 is not realistic;and that 2013 would be a stretch.

A Boeing representative noted that there has been some strong feedback concerning the requirements, andwhether they actually add value (note that Boeing itself has been quite supportive of the safety benefits thathave been associated with existing voluntarily-adopted SMS programs). He noted that MROs do not tend touniformly have formal (audited) QMS systems so he is hoping that the SMS can be aligned with existingregulations and standards.

Paskiewicz said that for manufacturing quality assurance, the systems that industry already has tend to be

ahead of what an SMS regulation is likely to reflect.




Subscriptions to The UPDATE Report are FREE. To subscribe, please send your request to [email protected].

CONTACT US!

Michele Dickstein

[email protected]

Jason Dickstein

General [email protected]

Stephanie Brown

Director of [email protected]

Diane Leeds

Account [email protected]

Erika Schnure

Programs & Membership [email protected]

ASA Staff is always interested in your feedback. Please contact us with any comments or suggestions.

Volume 18, Issue 4-5 June 18, 2010 The UPDATE Report · ASA members have been asking questions...

Documents

Transcript of Volume 18, Issue 4-5 June 18, 2010 The UPDATE Report · ASA members have been asking questions...